North American total in-store and online sales dipped 5%, while international sales fell 4%. Staples' net income dropped 44% to $96 million.

"We're making progress meeting the changing needs of our customers as we reinvent Staples," said Ron Sargent, CEO of Staples. "Despite a slow start to the first quarter, our results were in line with our expectations and we expect to build momentum throughout 2014."

Operating margins in Staples' North American retail and online business declined to 3.5% in Q1. Due to stronger competition and discounting, gross margins fell to 24.9% - the weakest quarterly number the company has reported since 2003. Staples announced in March plans to close up to 225 North American stores by the end of 2015, potentially saving the company $500 million. Staples expects to shutter 80 stores in North America during the second quarter alone.

For Q2 of 2014, Staples, Inc. expects sales to decrease year-over-year compared to the second quarter of 2013. The company is also forecasting Q2 earnings of 9 to 14 cents per share. Analysts, meanwhile, are now projecting Staples to record second-quarter sales of $5.18 billion.

As sales and margins at Staples, Inc. slipped last quarter, the company's ad specialty segment continued to make gains. "We had a solid quarter for the promotional products category with mid-single digit growth," Rich Witaszak, general manager of Staples Promotional Products, told Counselor.

Staples Promotional Products generated 2013 North American ad specialty sales of $434 million, a year-over-year increase of 6%, according to Counselor estimates.

ASI Radio Podcast: Exclusive Covey Interview
On this week’s Tuesday Morning Show, the hosts welcomed special guest Stephen M.R. Covey, co-founder and CEO of CoveyLink Worldwide and author of The Speed of Trust. Covey offered ideas for how industry salespeople can become more credible in front of customers and in turn gain continual referrals.Read Article

"The very first job of sales is to create trust," said Covey, who will present a half-day education session at ASI Chicago on July 15. "Trust is not just a nice, warm and fluffy value, it's an economic driver. People view value through a lens of trust. But too often people choose the counterfeit. Instead of talking straight, they spin. Instead of transparency, they have hidden agendas. Instead of righting wrongs, they try to disguise it and cover it up."

Click here to listen to the entire Covey interview. If you missed the radio show, a recording is now available at www.asicentral.com/radio. And, don't forget to join us for our next broadcast on Tuesday, May 27. Log on at 10:30 a.m. ET to listen to the show – and give us a call at (215) 953-4979 to hear your voice on the air.

Minnesota Bans Antibacterial Triclosan
Based on health and environmental concerns, Minnesota has become the first state to prohibit the use of germ-killing chemical triclosan in soaps, hand sanitizers and other hygiene products. Read Article

The new regulation, due to take effect in 2017, will greatly impact consumer hygiene companies, as triclosan is used in about 75% of antibacterial liquid soaps sold in the U.S., according to the Food and Drug Administration (FDA).

While the chemical hasn't been shown to be hazardous to humans, studies have found that it can disrupt hormones critical for reproduction in lab animals. Scientists also have raised concerns about the chemical contributing to the development of resistant bacteria. A University of Minnesota study published last year found increasing levels of triclosan in the sediments of several lakes, noting that the chemical can break down into potentially harmful dioxins.

It appears unlikely the ban will significantly affect supplier firms. Mel Ellis, president of HumphreyLine (asi/62050), said most suppliers in the ad specialty industry are using benzalkonium chloride, not triclosan, in the hand sanitizers they offer. "We dodged a bullet with this one," he said. Brandon McKay, CEO of SnugZ USA (asi/88060), confirmed that his company does not use triclosan in any of its products. "We feel sure of our manufacturing practices and the blends of products we offer since we manufacture all of our goods in-house," McKay said.

Keeping track of all the federal and state regulations being passed does remain something of a hot topic, though. "We're spending $250,000 a year on regulatory compliance and product safety," Ellis said. "It's an incredible burden on small business."

Minnesota State Sen. John Marty, one of the lead sponsors of the bill prohibiting triclosan, expects other states and the federal government to act on the issue as well. Last year, the FDA announced it would be revisiting the safety of triclosan and other germ-killing ingredients. An FDA rule proposed in December would require manufacturers of antibacterial hand soaps and body washes to demonstrate their products are safe for daily use and more effective than plain soap and water.

The Joe Show: Packing A PunchIn this episode of The Joe Show, Managing Editor Joe Haley shows off a host of new products that can be customized for upcoming campaigns. Looking for a unique travel mug? Want an item to pitch to homebuilders? Need a fun idea for automotive clients?Read Article

Expo East Features Winget Keynote
Attendees at PPAI's Expo East who expected a coddling, uplifting message from keynote speaker Larry Winget were in for quite a shock this week. The self-professed "Pitbull of Personal Development" delivered straight talk in his speech, "The Cold, Hard, Ugly Truth About Success" on Tuesday.

"Success does not come down to passion and happiness," said Winget, a six-time best-selling author. Happiness in your job, according to Winget, is about finding things you enjoy to offset what you don't like. Hard work and excellence ultimately determine how successful someone is in business. "Our moral compass is off kilter in some ways," Winget said. "People don't want to talk about hard work. They want to do as little as possible."

Winget said there were only "18 good ideas in the world" that have become overcomplicated in today's business environment. According to Winget, businesspeople must balance responsibility with having fun, and they must have flexibility – a key to delivering excellent customer service. Even as he labeled many clients as "idiots," Winget cited a number of bad, and funny, customer service experiences he endured. "You give me bad service? I will never forget it," he said.

Besides Winget's keynote, more unusual approaches were at the heart of the show – particularly among products on display. Hampton Technologies LLC (asi/59475) and promopong.com showed off branded corn hole and beer pong boards, but "it's not just for drunken college kids," said Partner/COO Steven G. Gallagher. "We do so much work for charitable events where they auction off the items at the end of the night." It's also a great ice breaker for networking events and a fun activity for corporate retreats, he said.

Watches, too, are finding versatility outside of traditional corporate gift programs. Showcased as well was the chill watch from Intelligent Galaxy LLC (asi/62731), an item featuring a silicone band, which makes it ideal for the health care field. "Because the band is silicone," said Intelligent Galaxy President Vito Ciaravino, "germs won't adhere to it, unlike a metal band." Doctors and nurses can wear it and simply wash it with hand sanitizer. It's available in 13 bright colors and is water resistance up to 150 feet, Ciaravino said.

Counselor Commentary: Get In Front Of PR Pitfalls
Public relations nightmares tend to come somewhat slowly. There's the initial news of a problem, then the discovery of why the situation occurred and who was at fault, then some realization about who knew what and when they knew it. Finally, there's the arrival at a solution – which is sometimes accepted by recipients and other times mocked, criticized, and the driving force for a backlash.

Just ask The New York Times, which has been in the news the last couple of weeks because of a PR situation that didn't have to become as public or incendiary as it did. The company learned a lesson that's quite valuable for businesses right now: News travels very fast today and if you're not in control of the messaging, it can quickly take on a life of its own.

Arthur Sulzberger Jr., the publisher and head of the family that owns the newspaper, fired The Times' executive editor, Jill Abramson. While he thanked her for her service to the company upon naming her successor, Sulzberger also publicly said that the newsroom and the company's editorial staffers needed new direction. But, initially at least, that was all the company really announced about the changes at the top of the newspaper's editorial staff.

Thus began the newspaper's PR nightmare. Without any further explanation about Abramson's firing, the Internet gossip mill began churning. Stories quickly surfaced about Abramson claiming gender discrimination and pay inequality. Suddenly, The New York Times was being criticized for discriminating against female workers, and even the company's own media columnist wrote this story about the unfortunate situation and its internal impact.

Feeling compelled to quell the gathering storm, Sulzberger issued a statement to the company's newsroom 23 hours after news first broke about Abramson's firing. That was last Thursday, after he initially said he'd have nothing further to say about the management change. He then sent out another statement on Saturday that was meant to correct "a factually incorrect storyline" that emerged in just a few days. Finally, he granted an interview to Vanity Fair about the situation on Sunday in an effort to give his full side of the brewing controversy, in which he admitted having second thoughts about his decision-making.

This seems like public relations 101, but The Times flunked the course. Don't make the same mistake. If a situation arises where your credibility is being questioned – whether it's something as public as what The Times faced last week or as private as botching a client's order – you need to act fast, tell the whole truth as you know it, own up to mistakes, and work to fix it.

There's a business book that came out last year titled Masters of Disaster: The 10 Commandments of Damage Control, which crystalizes how to overcome PR problems in its first commandment: Full Disclosure. "Everything that can come out will come out," the authors write. "All too often it's the drip, drip, drip that causes most of the lasting damage."

Dunn Manufacturing Acquires Aresco
North Carolina-based Dunn Manufacturing, the parent of Adcapitol (asi/31260), has acquired Aresco Manufacturing and Safety (asi/36720) of Palm City, FL. Financial terms of the deal were not disclosed. Going forward, according to Dunn, the supplier will continue to manufacture Aresco's line of promotional aprons, tote bags and safety clothing, integrating the items into the Adcapitol/Dunn Manufacturing offerings.

"This acquisition will allow current Aresco and new customers to receive the same quality products they expect with the added customer support and competitive price that Dunn Manufacturing is known for," Dunn said, in a statement.

Dunn Manufacturing/Adcapitol has been owned and operated in the U.S. for more than 100 years and maintains a 250,000 sq. ft. production facility. The supplier offers a variety of promotional items, from clothing and headwear to banners and bags.

Counselor Q&A: How We Train Employees
Starting a new job can be intimidating, especially for people who've never worked in the ad specialty industry before. That's why successful promotional products companies invest in strong employee training programs – ones that create and build on a solid foundation. "We have a pretty comprehensive program that includes a focus on our company culture and belief system," said Mary Curtin, vice president of administration at Top 40 distributor 4imprint (asi/197045).

The training program at 4imprint is both detailed and personal, kicked-off in a special presentation for new employees by the company's president, Kevin Lyons-Tarr. But structured learning doesn't begin and end on an employee's first day at the Wisconsin-based distributor. Click here to read the latest Counselor Q&A and find out how 4imprint supports its staff members with training throughout their careers.

Will You Be The Next Wearables Top Decorator?Wearables magazine is bringing back its popular Top Decorator competition for 2014. Sponsored by Hanes Branded Printwear (asi/59528), this competition will test the technical and creative skills of screen printers with a series of challenges throughout the year. What do you need to know?

Each month will be its own standalone challenge. If you don't participate one month, you are free to enter in the following month's challenge.

Anyone can enter. The competition is open to anybody with access to screen-printing equipment.

There will be prizes. Each month's winner will receive a prize courtesy of Hanes.

This is a competition. A combination of judges' marks and a popular vote by Wearables readers will help determine the winner of each challenge.

The first challenge will involve printing on polyester tees for a hypothetical charity walk. If you are interested in participating, contact Wearables Editor C.J. Mittica at cmittica@asicentral.com. Participants who sign up will receive further instructions and supplied artwork as well as T-shirts to print on, courtesy of Hanes Branded Printwear. The deadline for your printed submissions to arrive is Friday, May 23.

In The News
Prime Line (asi/79530) introduced a new product line called Awareness By Prime at the Expo East tradeshow. The line includes cause-related items and is comprised of both existing Prime items and others from Points of Light and Source Abroad, the company's recent acquisitions. The new line continues Prime's history of supporting awareness causes: In 2012, for example, the company donated $7,000 raised from sales of pink items to breast cancer research. For more information, visit www.primeline.com/awareness.

Shumsky Promotional (asi/326300) is now certified as Level 1 PCI DSS-compliant. An independent Quality Security Assessor recently audited the company to ensure that it meets industry best practices and security controls required to keep credit card data and other sensitive information secure.

J. America (asi/62977) has been named a Top Innovator in 2014 by Apparel Magazine. Joining J. America on the list are brands like adidas USA, Aeropostale, Brooks Running, and J.C. Penney.

Weepuline, LLC (asi/40560) announces that Girl Scout Stephany Crooks from Mason, MI, used Weepuls products as admission tickets for her Girl Scout Gold Award project fundraiser dance. The event will benefit The Vestis Project, which works to provide caps, gowns and tassels to high school seniors in need. For more information, visit www.facebook.com/TheVestisProject and www.weepuls.com.

World Emblem International (asi/98264) has added its High Visibility Striping services option to its online catalog. Visit www.worldemblem.com for more information.

Introducing a new and better way to get your business going and growing.

Proforma's revolutionary Results First program will get you the results you want before making any financial commitments to join Proforma.

Only Proforma has the resources to offer a program like Results First. Only Proforma has $4 million per year in sales and marketing support, $430 million in purchasing power and a 150 person support team to truly deliver the results you want.

Click here to learn how Proforma'sResults First program can grow your business—even before you join.

THE #1 REASON TO ATTEND A TRADE SHOW IS NEW PRODUCTSPromotions Southwest has thousands!

Timed perfectly for the kick off to the fourth quarter, Promotions Southwest, Monday, August 11, at the Irving Convention Center, gives you the chance to ﬁnd what you need (or didn't know you needed!) to offer unique solutions to your clients end-of-year projects.

See suppliers who weren't at SAGE, like Enduraline, Lanco, Pepco Poms and Staton